International Employment Practices – What You Need to Know

If you’re considering expansion overseas, you’re probably starting to learn about international employment practices. Questions on this topic are common among our clients because it’s a complicated subject, similar to US tax code but without the same level of accessibility to information and it’s potentially in a different language.
Now imagine learning not only foreign tax laws, but also new benefit requirements, termination restrictions and employee classifications in a fresh market; talk about complicated. This is exactly why we receive so many questions about international employment practices. There are many legal liabilities involved and you need to get it right. If you don’t, look forward to heavy penalties.
To help ease your mind, below we discuss the international employment practices you need to keep an eye on. Keep in mind this list is not exhaustive and should not be the basis of your legal decisions, if you have more questions please contact us or an attorney directly.
Independent Contractors vs. Employees
Hiring an independent contract in an international market is a much different process than in the States. First, it’s important to understand that you cannot hire a foreign employee through a US employment contract. To hire internationally, you need to create a local contract that abides by the target country’s laws and withholding requirements. If you fail to meet these requirements, prepare yourself for hefty fines if the country determines that your contractor is operating as an employee.